"Drink less but drink better" says China, as 2018 imported wine volumes slump and values rise

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It appears from the 2018 annual import figures for China that the country may be losing it’s thirst for cheap wines from Europe.  

One of the main takeaways from these new numbers is a significant decline in the volume of French and Spanish wine imported (a total decline from the two countries of over 6.3 million 9-liter cases vs 2017), but conversely an increase in their average cost.  In the case of France, average landed cost of wine increased by a whopping US$10 per case of 12!  Average cost for imported wine overall increased by 9.5%, from US$41.53 to US$45.50 per 9 liter case.

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Factors reported by Nimbility back at the mid-year point which you can view here remain in play, and it does appear that the China market in general is “trading up”.  South Africa did indeed claim the title for highest rate of growth year-on-year at +33% in value terms, and New Zealand held on to it’s title of the highest average price, US$102.68 per 9 liter case, despite relatively low volumes.

Several other factors may be at play leading to an overall decline in imported wine volumes into China:

  • China economic slowdown

Overall, as has been widely reported in various articles including this one from the SCMP China’s economy has been slowing down in 2018.  

  • China stock market in a persistent decline

The Shanghai stock exchange composite index dropped by 27% over the course of 2018, consistently moving in a downwards direction throughout the year.  Consumer confidence suffered, and expenditures on discretionary items such as imported wine were negatively impacted as a result.

  • RMB currency devaluation

The RMB began 2018 at a little over 6.3 to the USD, but by July and gone to just over 6.8, raising the average landed cost of imported wines by 8% 

  • USA trade war

The looming USA trade war has already seems to have had a dampening effect on the Chinese economy, which in turn tamps down in particular the corporate gifting and entertaining sector of the imported wine market in China. 

“Fasten your seat-belts for a bit of roller coaster ride in 2019,” warns Nimbility Founding Partner Ian Ford. “However, it’s important to bear in mind that per capita wine consumption in China remains quite low so there is still plenty of headroom for serious producers to tackle the market, especially with a strong local partner and a view to building long-term, sustainable business.”

For in-depth analysis and bespoke reports please contact us at info@nimbilityasia.com

Disclaimer: these numbers only represent shipments to China, not depletions or sales or consumption in the market directly. We believe strongly in a corollary between shipments into China and trends in the market, but there is a long time lag between the two, and there can be distortions between shipments and consumption at any point in time.

Apolline Martin